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The ACT has held onto its AAA credit rating and is well placed to recover from the coronavirus pandemic but there could be delays to the territory government’s multi-billion dollar infrastructure program. Ratings agency Standard & Poors reaffirmed the ACT’s rating on Wednesday. It said the ACT economy was “outperforming most domestic and international peers”. “Our rating on ACT reflects its robust financial management; very high-income economy, which relies on the public sector and is outperforming most peers; and exceptional level of liquidity,” the report said. There remains concerns that the territory won’t be able to deliver its full infrastructure program, with the agency predicting that the 20 per cent of the government’s pipeline won’t be delivered in the next three years due to “capacity constraints”. Chief Minister Andrew Barr said this wouldn’t mean any projects would be canned completely but rather some projects could be delayed. “It would be that all projects would continue, but maybe not at a pace that is currently projected,” he said. “One of the factors will be availability of labor and supplies. In order to deliver a project it’s going to depend on the asset type, the scale of the project, whether it will be delivered by local infrastructure partners, or whether it will be something that would be on a national level. “One of the things that we’ll have to contemplate is the mix of our infrastructure program will it be hundreds of small projects, or a small number of larger ones.” However, Mr Barr was quick to fend off any suggestion this would result in delays to major project such as the next stage of light rail or the Canberra Hospital Expansion. “Nope, nope,” he responded when asked by The Canberra Times. But it would mean work on a new stadium could not be accelerated, Mr Barr said. This is despite a feasibility study that found the government could save $60 million if it was built in the next six years. “There’s not room in our infrastructure program nor industry capacity to be adding new things,” he said. Mr Barr was boastful about the ACT retaining its AAA credit rating. He said it would improve the territory’s bottom line as it sought to refinance loans in the coming months. “This leaves the ACT is the only state or territory in Australia with a AAA credit rating,” he said. “We’re about to refinance about one billion dollars of government debt that we were paying about 4.5 per cent interest on, we should be able to refinance that off the back of a AAA credit rating at somewhere between 1.5 and 2 per cent. “That’s gonna save for territory $20 to $25 million a year in interest costs, over a 10 year government bond, so that’s a couple of 100 million dollars, that would equate to the equivalent of a pretty big infrastructure project for the territory.” But S&P said there was a one-in-three chance the ACT’s performance would not live up to the forecast. As well, the ACT’s rating could be downgraded if the federal government’s rating was downgraded. The ratings agency says no state or territory could sustain a stronger rating than a federal government. Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content:
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The ACT has held onto its AAA credit rating and is well placed to recover from the coronavirus pandemic but there could be delays to the territory government’s multi-billion dollar infrastructure program.
Ratings agency Standard & Poors reaffirmed the ACT’s rating on Wednesday. It said the ACT economy was “outperforming most domestic and international peers”.
“Our rating on ACT reflects its robust financial management; very high-income economy, which relies on the public sector and is outperforming most peers; and exceptional level of liquidity,” the report said.
There remains concerns that the territory won’t be able to deliver its full infrastructure program, with the agency predicting that the 20 per cent of the government’s pipeline won’t be delivered in the next three years due to “capacity constraints”.
Chief Minister Andrew Barr said this wouldn’t mean any projects would be canned completely but rather some projects could be delayed.
“It would be that all projects would continue, but maybe not at a pace that is currently projected,” he said.
“One of the factors will be availability of labor and supplies. In order to deliver a project it’s going to depend on the asset type, the scale of the project, whether it will be delivered by local infrastructure partners, or whether it will be something that would be on a national level.
“One of the things that we’ll have to contemplate is the mix of our infrastructure program will it be hundreds of small projects, or a small number of larger ones.”
However, Mr Barr was quick to fend off any suggestion this would result in delays to major project such as the next stage of light rail or the Canberra Hospital Expansion.
“Nope, nope,” he responded when asked by The Canberra Times.
“There’s not room in our infrastructure program nor industry capacity to be adding new things,” he said.
Mr Barr was boastful about the ACT retaining its AAA credit rating. He said it would improve the territory’s bottom line as it sought to refinance loans in the coming months.
“This leaves the ACT is the only state or territory in Australia with a AAA credit rating,” he said.
“We’re about to refinance about one billion dollars of government debt that we were paying about 4.5 per cent interest on, we should be able to refinance that off the back of a AAA credit rating at somewhere between 1.5 and 2 per cent.
“That’s gonna save for territory $20 to $25 million a year in interest costs, over a 10 year government bond, so that’s a couple of 100 million dollars, that would equate to the equivalent of a pretty big infrastructure project for the territory.”
But S&P said there was a one-in-three chance the ACT’s performance would not live up to the forecast. As well, the ACT’s rating could be downgraded if the federal government’s rating was downgraded.
The ratings agency says no state or territory could sustain a stronger rating than a federal government.
Our journalists work hard to provide local, up-to-date news to the community. This is how you can continue to access our trusted content:
